Is no one thinking of the rich and their plight? No one? Backroom in the SBP. December 11, 2012

There’s an almost parodic piece in the Backroom column in the Business Post on the issue of the Budget.
Under the heading ’Overburden the rich and our recovery will stall’ we are treated to a most interesting analysis. Though oddly one that doesn’t in any way provide any actual evidence that overburdening the rich will stall the recovery.
After a rather pro-forma lash at the ‘poverty industry’, that will – of course – using Charlie McCreevy’s definition be ‘ the serried ranks of anti-poverty campaigners, parties of the left, various academics and people like Fr Sean Healy’ it continues with the following:

However much McCreevy and Haughey may have railed against Healy and his fellow anti-poverty campaigners, there should be little doubt that the poverty industry has won the soft debate for Ireland’s hearts and minds and, more importantly, for the decisions of Ireland’s policy-makers.
For it has become an axiom of public debate, in any area for decision, that we must first consider the needs of the poor. Consideration for the needs of the poor has replaced consideration for the views of the Holy Father and the imperatives of national reunification as the rock on which any successful Irish political policy must be based. The unspoken – but essential – implication is that we can safely disregard the interests of the better-off.

Of course, as Conor McCabe in Sins of the Father, and Michael Taft and others have noted, this state has been constructed across the last century to enable the interests of the better-off, and even the most cursory examination of our tax code, our system of justice, our social welfare provision and the very fabric of the state would demonstrate this.

S/he goes on:

The assumption underpinning this ‘soak the rich’ movement is that the burden of budgetary adjustment has been borne disproportionately by the poor and the vulnerable.

And on:

Siptu’s November call was typical of this train of thought: “We are calling on the government to place the burden of adjustment on the sections of society who can afford to pay more, rather than inflicting further pain on lower and middle income sections of our society.”
But what are the facts behind the rhetoric that the lower and middle income sections of society have borne a disproportionate burden of budgetary adjustment? Last week, the Department of Finance published analysis of the distributional impact of recent budgets. This reveals that it is the better-off – and not the poor – who have borne far and away the heaviest burden of budgetary adjustment.

Take it away…

The department states: “A comparison of austerity measures to 2011 in six EU countries by researchers on behalf of the European Commission found that reductions in disposable income due to tax and contribution increases in Ireland were larger in the upper part of the income distribution. The research also showed that over 30 per cent of the overall adjustment was borne by the richest 10 per cent of the population and approximately 70 per cent by the richest four deciles.”

That is no doubt correct. Of course there is the small point that per definition those who are richest have…er… more. And those who aren’t… don’t.

The report continued: “Similar results were presented by the ESRI based on an analysis of the cumulative impact of budgetary policy over the full period to Budget 2012 since the initial budgetary response to the emerging crisis in October 2008. The greatest losses over the period were for those with high incomes, and the smallest losses for those with the lowest incomes. Losses for low income deciles range from 4 to 6 per cent, for middle income deciles from 7.5 to 9.5 per cent, and 11-13 per cent for the top two income deciles.”

Backroom appears oblivious to the fact that a 12 per cent for someone on a six figure wage is radically different to 5 per cent for someone on a low five figure sum. There’s simply no comparison. And it is of course worse again for those who have no income and are of necessity using social welfare provision (and let’s not forget our 14 per cent or so unemployment rate). Funnily enough though elsewhere in the SBP, using those very figures ‘Backroom ’ uses the general consensus is that the last two Budgets have been markedly more regressive in their effects than the previous three. Odd that.
But for Backroom there’s no evidence they’ve any appreciation of this:

You would not have got the slightest hint of these facts if you relied on Irish public debate for your information on this important question. Instead, participants on TV and radio debates, such as Pearse Doherty and Róisín Shortall, went completely unchallenged as they blithely asserted, as a matter of fact, that the poor had borne the major burden of budgetary adjustment.

And check out this localised spin on Romney’s 47 per cent rhetoric in the US Presidential election:

A sort of political muscle memory overpowers any notions of intellectual rigour or respect for the facts. The fact that there are many more poor people with many more votes provides a generous garnish of political self-interest to this morally-questionable stance. The danger for Ireland is that by soaking the rich, the country may asphyxiate ambition and thereby the foundation of any sustained recovery.

Yeah, that’s right. The orthodoxy – and let’s note in passing that in a Dáil of 166 there are 19 or so FF TDs and 74 Fine Gael TDs, a CC drawn from FG plus assorted right Independents and a fair number of LP reps where it’s hard to tell the difference, which constitutes by my reckoning a majority of TDs – trembles before the power of the ‘many more poor people with many more votes’… though you know, even the way that is phrased and the use of the term ‘poor’ – undefined and used in a general sense – is very telling too.
But I guess from a certain height everyone looks equally poor to those who have most.

I saw that piece and thought the same things. When your headline states that burdening the rich will slow recovery, you would imagine that the article would actually focus on that. Instead, it is a rather petulant attack on various religious and leftist groups.

The piece is also rather ironic given that a few pages before the SBP provides an analysis that says the budget has hit the poor harder than any other group. Overburdened rich, my eye!